Report Template

Report to/Rapport au :


Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique


and Council / et au Conseil


28 February 2005 / le 28 février 2005


Submitted by/Soumis par : Ned Lathrop, Deputy City Manager/Directeur municipal adjoint

Planning and Growth Management/Service de l'urbanisme et de la gestion de la croissance


Contact Person/Personne ressource : Réjean Chartrand, Director, Economic Development and Strategic Projects

Economic Development and Strategic Projects Branch

(613) 580-2424 x21696,


Rob Mackay, Manager, Strategic Projects, Economic Development and Strategic Projects Branch, (613) 580-2424 ext 22632,



Ref N°: ACS2005-DEV-BUS-0008













That Corporate Services and Economic Development Committee recommend Council:


1.                  Approve the proposed public-private partnership framework; and


2.                  Authorize staff to initiate a Request for Qualification process for:


§                     The phased design and construction of a twin pad arena with a compatible outdoor recreational facility; and


§                     The operation and maintenance of the proposed arena and the existing Kinburn District Service Centre and proposed ancillary services.




Que le Comité des services organisationnels et du développement économique recommande au Conseil :


1.                  D’approuver le cadre proposé pour le partenariat entre le secteur public et le secteur privé; et


2.                  D’autoriser le personnel à amorcer le processus pour la demande de qualification pour : 


n                    La conception et la construction par étapes d’un aréna à deux patinoires avec une installation de loisirs en plein air compatible; et


n                    L’exploitation et l’entretien de l’aréna proposé et du Centre du service à la clientèle actuel de Kinburn ainsi que des services auxiliaires proposés.




On 15 December 2004, Council directed staff to proceed with development of the P3 framework for the construction and operation of an arena facility at the Kinburn District Service Centre site.


An Expression of Interest (EOI) was posted on MERX on 8 January 2005 with a closing date of 27 January 2005.


This report provides the results of that EOI, addresses issues that must be resolved in order to advance a successful partnership, and proposes a framework for proceeding.





Public-Private Partnership Process


The selection of a private sector partner to assist in the delivery of a public service is one of the key elements in a P3 process.  Over the past two years, the City has developed a partnering process that led to the successful execution of five P3 agreements.  This process builds on the creativity and strengths of the private partner to assist in defining the solution and sharing the risks of each project between the City and the private sector partner.


Inherent in the creation of a partnership is the goal of a long-term relationship, and therefore, the selection of a partner needs to be conducted in a rigorous and prudent manner.


For this project, an Expression of Interest was issued for the purpose of gauging the level of interest and ability of the private sector to leverage the existing client service building and vacant land to advance an arena complex.  Participation at this stage did not pre-qualify or shortlist respondents for further stages of the process.  Any and all interested parties will have the opportunity to participate in future stages.  To ensure wide distribution and awareness of the project, ads were placed in the Citizen, Le Droit, Ottawa Business Journal newspapers as well as the Ottawa Construction Association website.


At the same time, staff continued in their due diligence activities with further research into demand for ice surfaces and potential uses for the vacant space at the Kinburn District Service Centre.  As indicated in the previous report to Council, an amendment is required at this site to add an arena as a permitted use.  This re-zoning process has been initiated.


Results of the EOI and Due Diligence Research


The City’s Supply Management Division led the EOI process. Eight submissions were received and reviewed by a team of five internal staff from Parks and Recreation, Comprehensive Asset Management, Planning and Growth Management and Strategic Projects.  While there were no formal evaluation criteria, since this was an expression of interest, the responses to the questions were analyzed and discussed.


The consistent challenge identified by respondents was the lack of market demand to support a twin pad.  The relatively remote location of the site also presents a challenge to develop a business plan that provides a realistic revenue stream from the operation of the arena and ancillary services in the existing building.  Ideas were presented to provide year round use of both facilities with the acknowledgment that the City would have to contribute financially to the project.


During the same time period, staff in the Parks and Recreation Branch held a meeting with ice user groups in West Carleton and distributed a survey requesting information on the projected demand for hours and willingness to pay various rates for ice time.  A community forum was also held with community groups to solicit ideas for programs and services they would like to see offered at the Kinburn District Service Centre.


Through these various activities, two key messages emerged:


1)                  At this time there does not appear to be a strong enough demand for prime and non-prime ice time to support 2 ice pads;

2)                  There is a need to sustain and enhance a variety of community services including recreation, social support, public health and primary health care.


Given this information, staff recommends that the project focus on developing the Kinburn District Service Centre site as an all-season community hub, with the first phase of the development, being the construction of a single ice pad with compatible other uses, such as a soccer field.  The design of the arena facility would take into account the future addition of a second ice pad when demand has been established.


The City has identified the need for soccer playing surfaces.  The recently approved Sports Fields Strategy concluded that the City needed to develop 124 new soccer fields across the City, including 14 new fields in the west district, to meet current and future demand.  A full-sized soccer field developed at the Kinburn site, while not a strong revenue generator, would attract users to the site and offer cross-programming opportunities with the arena and the district service centre.  


The existing district service center building is currently under-utilized. The client service counter, ward councillor offices and administration space for various City programs and staff use approximately 13,000 of the 20,425 gross square feet.  The remaining space is vacant.


The City will continue to require office space and the district service counter for the delivery of municipal services to the community of West Carleton.  Preliminary work indicates that the space can be consolidated from the current occupancy of 13,000 gross sq. ft. to 6,500 sq. ft. for office space and an additional 2,000 sq. ft. for programming space.


This creates opportunities for the private sector partner to utilize the surplus space for revenue generation.  The proposed zoning by-law amendment will not only permit the arena use on this site but as well other potential uses such as, but not limited to, food service, sports services, office space, meeting rooms and banquet facilities.


Anticipated Partnership Framework


A P3 partnership holds the potential to move financial risk to the private sector partner when a strong ability to generate revenue exists.  In this project, the ability to generate revenue is more limited.  As such, the preferred approach is that:



§         the City will secure and service the long-term financing starting in 2007 for the new facility with expected contributions from the private sector partner to offset in part these costs;




Municipalities have a long history of subsidizing ice rental in their communities.  However, with continual growth and demand for ice time from all age groups, it is becoming more and more difficult to meet the demand at the subsidized rates.  The gap, between the costs of constructing, operating and maintaining ice arenas and the cost of service delivery, needs to be narrowed.


Municipalities typically incur a $250/hr. cost to own and operate an arena.  This includes the cost of land, design and construction costs, life cycle costs, operation costs, overhead and administration.  The private sector charges in the range of $195-$224 /hr. for prime ice time compared to the subsidized rates of $94-$176/hr. charged by the City.  Over time, the City will need to close this gap to ensure the subsidized ice rental program is sustainable.


The operation of the arena, compatible recreational facility and district service center space is anticipated to break even or slightly better.  Depending on the uses proposed, there will be an ability for the private partner to contribute towards the repayment of the capital financing, however, this project is not expected to be fully self-supporting.


The analysis of the expenses and potential revenue for this project, indicate the following:


Capital Expenses:


The sources of funding for the capital portion of this project are:




Balance of capital reserve for arena development in West Carleton


2005 capital budget


Retrofit of former rural township halls


Community fundraising commitment in dollars and in kind services





The City’s design and construction cost estimate for a single pad arena with expansion capability, a full-sized soccer field and required site development is in the range of $5.2M to $7.1M, leaving a balance of approximately $2.4M to $4.3M to be funded.  The private sector partner will be required to contribute towards the cost to finance this amount but the exact amount will not be known until the completion of the RFP stage of the procurement process. At this time, the maximum exposure to the City is the repayment of the capital costs, which translates into an annual contribution of approximately $190K to $350K per year starting in 2007 over a 20-year period.


Partnering Process - Request for Qualifications (RFQ)


The next step in the process is to proceed to the Request for Qualifications (RFQ) or the Request for Proposals (RFP) stage.  Given the positive number of respondents to the EOI, it is recommended to proceed with an RFQ.  This allows the City to short-list and pre-qualify respondents for the RFP stage.


The RFQ will have mandatory criteria requiring proof of the respondent’s ability to arrange for financing, performance security and insurance coverage.  To be considered for the short-list, the mandatory requirements must be met.  Submissions not fully complying with any of the mandatory requirements will be deemed non-responsive and will be given no further consideration.  The criteria subject to point rating will request information on the experience and qualification of the respondent as it relates to this project, how well they understand and can meet the City’s objectives, their financial capacity to design, construct and operate in the long term.


This stage pre-qualifies respondents who then are eligible to enter the next stage of Request for Proposals.  Those short-listed are invited in the RFP stage to provide specific details on their business plan, approach and design.


As a best practice, an independent Fairness Commissioner will be appointed in the early stages to assist in both the RFQ and RFP to ensure that the process is open, fair and transparent.


Next Steps and Timelines


The Strategic Projects division has initiated the RFQ process and subject to Council’s approval of this report, the RFQ will be released on MERX.  This is anticipated to take place in early April 2005. 


As directed by Council, the results of the RFQ will be reported in June 2005 prior to the next step of issuing the RFP.





A preliminary site plan prepared for the Kinburn District Service Centre site indicates that the facility and required parking can be accommodated without significant environmental impact.  Any minor impacts will be identified and mitigated through the site plan control process.  Modifications to the existing septic system and water supply may be required depending on the proposals received.




The development of an arena with a compatible recreational facility and improved use of the current under-utilized district service centre space will create an all-season community hub for the rural residents of West Carleton.  The population growth in the surrounding areas and ever increasing demand for recreation services points to an increased market to support future expansion of the arena with a second ice pad.





A re-zoning application has been initiated to add an arena with ancillary services as permitted uses.  Public consultations will be held as part of that process.  In addition, follow-up consultations will be held with the ice user groups who were invited to respond to the survey.





Staff’s analysis has concluded that there will be sufficient revenues to cover the operating costs for the arena and the ancillary services. Depending on the uses proposed to complement the arena, additional revenues will be generated to contribute towards the repayment of the capital financing.  The financing is expected to be in the range of $2.4M to $4.3M and will cover the expected shortfall in the construction of this facility.





Document 1      Location Map – Kinburn Client Centre and Proposed Arena Facility





Staff will initiate the RFQ process and report back to Council with the results before proceeding to the RFP stage.





PROPOSED ARENA FACILITY                                                                                  Document 1